New World Mobility: Jockeying for Position

The chief executive officer of New World Mobility, a cellular phone operator in Hong Kong, had gathered the senior management team to discuss the current state of the mobile phone industry in Hong Kong. The double digit growth seen over the past few years was slowing, and with new entrants and changes in the external environment, the industry had become fiercely competitive; each operator was trying to better the pricing and marketing promotions that other operators had designed to lure customers away from their competition. Matching or beating these various promotions ended up being a money-losing proposition, and encouraged customers to switch operators with every new promotion, thus increasing the industry churn rate. As a result, loyalty among users was very low, and each mobile operator in Hong Kong was either losing money or had suffered a significant decline in revenues. This leads to discussions of how to compete in an environment of intense competition, including offering innovative value-added services, and investment in leading edge technology.